On Sept. 26, 2023, Federal Trade Commission (FTC) Chairwoman Lina Khan launched an antitrust lawsuit against Amazon. The company is an exploitative monopoly, Khan's case argues, and must be restructured to “restore the lost promise of free and fair competition.” Yet Amazon has said the case is "wrong on the facts and the law." Her crusade has echoes of her commission’s investigation of monopolies in the electricity industry in the late 1920s.
Like Amazon in 2023, the electricity companies had built an enormous distribution network that proved popular with customers even while they ruffled regulatory feathers. The FTC's investigation in the 1920s turned up juicy details of nefarious business practices and underhanded dealings. Newspapers splashed the revelations on the front pages, while a few members of Congress thundered about the “fangs” of monopoly fastened on to the necks of consumers. But for the most part, Americans just shrugged.
Why?
It wasn’t just because the electricity monopolies offered good electricity service at a reasonable price, although they did. It was because executives had spent two decades courting public opinion. By the time the FTC issued subpoenas, presented evidence, and heard witnesses in 1928, the electricity industry had already won over Americans. And in the mind of electricity executives, that was all that mattered. They were right. This lesson provides clues as to what might determine the outcome of the FTC’s battle with Amazon today.
In the first decade of the 20th century, electricity executives encountered a public relations nightmare. They had treated customers with scorn and gotten caught bribing city councils, which precipitated demands from reformers for strict government regulation of electricity companies or outright government ownership of their networks.
In responding to this crisis, electricity company executives learned from a fatal mistake made by 19th century railroad monopolies. The railroad companies had expressed a “public be damned” attitude, which fueled animosity from Americans and aggressive government interference in their industry.
To avoid any similar limitations on their control of the electricity industry, executives undertook the largest non-governmental public relations campaign the U.S. had ever seen. Their logic was simple—though at the time it was revolutionary. Public opinion now ruled the political economy of the nation, these executives believed. No monopoly operating permit, rate hike, or regulatory structure could survive if it failed in the court of public opinion. “Public sentiment controls the ultimate destiny of every utility company,” declared an electricity executive in 1922.
Accordingly, in 1908, the industry announced a new slogan: “the public be pleased.” This motto encapsulated the insight that customers wanted to at least feel like they were in charge of corporations. To generate that feeling, executives intensively engaged in PR activities.